Australia's lower house of parliament passed legislation for its controversial mining tax starting in mid 2012, which it hopes will generate AUD 7.7 billion in its first two years.
The bills must now be endorsed by the upper house Senate in early 2012, where the government and the Greens have the numbers to ensure the tax becomes law.
Following are details of the laws, which were framed in negotiations with global mining giants BHP Billiton , Rio Tinto and Xstrata ahead of the 2010 national elections.
1. The Minerals Resource Rent Tax for iron ore and coal will commence on July 1st 2012, and apply to all new and existing iron ore and coal projects.
2. The Treasury estimates the tax will generate AUD 3.7 billion in fiscal 2012/13, AUD 4.0 billion in 2013/14 and AUD 3.4 billion in 2014/15. Concessions to win independent support will shave AUD 300 million from revenue over five years.
3. Revenue is earmarked to pay for a cut in the company tax rate from 30% to 29% from July 2013. The company tax cut starts in July 2012 for small business.
4. The MRRT is set at 30% but has an effective rate of 22.5% when special mining extraction allowances are taken into account.
5. Miners with MRRT assessable profits under AUD 75 million per annum will be excluded from the new tax. The MRRT liability will be phased in for annual mining profits between AUD 75 million and AUD 125 million.
6. The tax will be paid by 20 to 30 of Australia's biggest iron ore and coal miners.
7. New investment projects will not pay any MRRT until they have made enough profit to pay off upfront investments.
8. The MRRT will carry forward unutilised losses at the government long-term bond rate plus 7%
9. The MRRT will provide transferability of deductions to allow miners to use the deductions that flow from investments in the construction phase of a project to offset the MRRT liability from another of its projects that is in the production phase.
10. The MRRT will provide a full credit for state royalties. Unused credits for royalties paid will be uplifted at the long-term government bond rate plus 7%
11. The MRRT will recognise past investments through a credit for the market value of that investment, written down over a period of up to 25 years.
12. A separate bill for the Petroleum Resource Rent Tax extends the 40 percent tax to all onshore oil and gas production, including coal seam gas and shale oil, and to the offshore Northwest Shelf project.
(Sourced from Reuters)
